FAQ(Nikkei 225 Total Return Index)

Nikkei Inc.

QA-101-E-20121203

1. What is the Nikkei225 Total Return?
The Nikkei 225 Total Return is an index that measures the performance of the Nikkei
225 that includes both movements in the component stock prices and reinvestment ofdividend incomes from its component stocks. The index is calculated and publishedas the value on the end-of-day basis since December 3, 2012. The index wascalculated retroactively back to the end of 1979 as its base value was 6569.47 (equalto closing price of the Nikkei 225 (price index) on the day).
2. How is the dividend reinvestment reflected on the index calculation?
The index value on a day is calculated by multiplying the index value on the previous
day by the return of the Nikkei 225 including dividends. This calculation indicatesthat dividends obtained from constituent stocks are reinvested with the weights of
the Nikkei 225 at the closing prices on the ex-date.
3. Why estimated dividends are used for the calculation?
In general, the figures of dividend incomes are recorded on the ex-dividend date forasset valuations. However, it is common for Japanese companies to fix dividends
paying to their shareholders after the ex-dates. Therefore estimated dividends areused for the index calculation on the ex-date. The difference between the estimateddividend and the actual dividend reflects the index on the next business day when thedividend is fixed. The timing to fix the dividends is the same as that for thecalculation of the “Nikkei Stock Average DP Index” (i.e. on the dates of annual
regular shareholder meetings in case of the annual dividends/ on the dates of thepublication by the companies in case of the other dividends).
4. What does the index value describe?
The index value represents the performance of the investment that tracks the Nikkei
225 including reinvestment of the dividend incomes from the component stocks sinceyear-end 1979. Therefore the return of the index between some two time points
shows the performance of the Nikkei 225 including dividend investments for theperiod. Comparing the returns of the Total Return Index with those of the Nikkei 225
price index clarifies the dividend impacts to increase the Total Return, i.e. effect ofdividend reinvestment.
5. Are the change rates of the Total Return identical to those of the Nikkei 225,
price index on other days than the ex-dividend dates?
The daily change rate of the Total Return is different from that of the Nikkei 225 on
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the ex-dividend date and the dividend adjustment date, i.e. next business day when
the dividend is fixed). However the daily change rates of the Total Return are thesame as those of the Nikkei 225 on the other days.
6. How is the dividend of constituent stock deleted from the index treated?
The point is whether or not the stock is a constituent of the Nikkei 225 on theex-dividend date. If the stock is a constituent of the index on the day, its dividend
is included on the index. If the stock is deleted due to delisting etc. on theex-dividend date, its dividend is not reflected on the index If the stock is aconstituent on the ex-dividend date and is deleted after the ex-date, the difference
between its estimated dividend and actual dividend, if there is, is reflected on theindex as the adjustment value.
7. How is the dividend of stock that is added on the index on the ex-dividend datetreated?
As the stock is a constituent of the Nikkei 225 on the ex-dividend date, its dividend
is included on the index.
8. How is it possible to obtain the historical index value?
Please visit the page of Nikkei 225 Total Return Index or “Download Centers” in“Indexes” page. Its daily and monthly data are provided for 3 years and 10 years
respectively. The “Premium Data Package” a subscribe-based paid data service
provides the historical index level data from the inception (since end of 1979) anddividend data for the constituents and the compiled dividend data, all of which areused for the index calculation.
9. Are there any financial products linked to the Nikkei 225 Total Return?
Not at this time. Because passive managers who hold mutual funds or ETFs linked tothe Nikkei 225 invest in sufficient number of constituent stocks of the Nikkei 225,
they receive dividend incomes from the stocks. On the other hand, the Nikkei 225 isa price return index excluding the dividends. Therefore, there is some difference ofthe performances between the Total Return Index and the Nikkei 225 price index. In
such case, using the Nikkei 225 Total Return instead of the price index could lead tomore accurate performance evaluation.

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